Some Investors May Be Willing To Look Past DL E&CLtd's (KRX:375500) Soft Earnings

The market for DL E&C Co.,Ltd.'s (KRX:375500) shares didn't move much after it posted weak earnings recently. We think that the softer headline numbers might be getting counterbalanced by some positive underlying factors.

Check out our latest analysis for DL E&CLtd

How Do Unusual Items Influence Profit?

To properly understand DL E&CLtd's profit results, we need to consider the ₩63b expense attributed to unusual items. It's never great to see unusual items costing the company profits, but on the upside, things might improve sooner rather than later. When we analysed the vast majority of listed companies worldwide, we found that significant unusual items are often not repeated. And that's hardly a surprise given these line items are considered unusual. If DL E&CLtd doesn't see those unusual expenses repeat, then all else being equal we'd expect its profit to increase over the coming year.

That might leave you wondering what analysts are forecasting in terms of future profitability. Luckily, you can click here to see an interactive graph depicting future profitability, based on their estimates.

Our Take On DL E&CLtd's Profit Performance

Because unusual items detracted from DL E&CLtd's earnings over the last year, you could argue that we can expect an improved result in the current quarter. Because of this, we think DL E&CLtd's earnings potential is at least as good as it seems, and maybe even better! On the other hand, its EPS actually shrunk in the last twelve months. At the end of the day, it's essential to consider more than just the factors above, if you want to understand the company properly. So while earnings quality is important, it's equally important to consider the risks facing DL E&CLtd at this point in time. You'd be interested to know, that we found 2 warning signs for DL E&CLtd and you'll want to know about them.

This note has only looked at a single factor that sheds light on the nature of DL E&CLtd's profit. But there are plenty of other ways to inform your opinion of a company. Some people consider a high return on equity to be a good sign of a quality business. So you may wish to see this free collection of companies boasting high return on equity, or this list of stocks that insiders are buying.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.